Post sponsored by

MIL OSI Translation. Region: Germany / Germany –

Source: DGB – Federal Executive Board The minimum wages in the 21 EU countries plus Great Britain, which have a statutory lower wage limit, have recently risen sharply on average – nominally by 6.0 on average and by 4.4 percent after deducting inflation. Both are the second highest increases in the past two decades. 18 EU countries raised their minimum wages at the beginning of 2020, Britain will do so in the coming weeks. This shows the new minimum wage report of the Economic and Social Sciences Institute (WSI) of the Hans Böckler Foundation. The German minimum wage, at EUR 9.35 per hour, is still noticeably lower than the lower wages in the Western European euro countries, which provide for EUR 9.66 and more per hour. In four euro countries the minimum wage is now more than 10 euros, in Luxembourg even 12.38 euros. The minimum wage will also be significantly higher than the German level in Great Britain from April onwards. The stronger increases are partly the result of debates and individual government initiatives aimed at raising minimum wages to a living level in many European countries. The EU Commission has also taken up this topic. So far, however, the minimum wages have been at least 60 percent of the median wage in only two EU countries, France and Portugal. In the opinion of many experts, this level is the lower limit for a living wage. The EU average, on the other hand, is just under 51 percent, according to WSI, in Germany the level is just below 46 percent and has been falling in recent years. “2020 could be the year of the minimum wage in Europe”, write the WSI tariff experts Prof Dr. Thorsten Schulten and Dr. Painted Lübker. “For the first time, the European Commission has taken the initiative for a European minimum wage policy in order to enforce ‘fair’, i.e. poverty-proof and living wages, minimum wages everywhere in Europe.” The new activities of the Commission reflected the high priority that the issue of adequate wages, poverty alleviation and have social cohesion in many European countries, the scientists emphasize. For example, a substantial increase in the minimum wage to 12 euros is being discussed not only in Germany. In Belgium and the Netherlands, trade unions and other social actors pleaded for at least 14 euros gross. In Great Britain, Spain and Slovakia, governments of different stripes have made a specific commitment to raise the lower wage limit to 60 percent of the median or average wage in their country in the coming years. The conservative government in London is even aiming to raise the minimum wage to two-thirds of the median by 2024, reaching the threshold typically used to define the low-wage sector, and WSI researchers’ analysis shows the increased momentum. The strongest percentage increases from early 2019 to early 2020, as in previous years, were recorded in the Central and Eastern European EU countries, where the nominal growth rates are currently between 6.1 percent in Slovenia and 15.6 percent in Poland. In the western and southern European member countries, the increases range from 1.2 percent in France and 1.7 percent in Germany to 2.3 percent in the Netherlands, 4.9 percent in Great Britain and 5.8 percent in Portugal up to 10, 9 percent in Greece, where the last increase occurred during the year. The development in Spain is particularly remarkable for the scientists. There, the minimum wage had been increased by 22 percent in early 2019. “After the Spanish economy coped with this extraordinary increase relatively well and the negative employment forecasts were not confirmed,” said Schulten and Lübker, the increase was strong again in early 2020 at 5.6 percent. It is also noteworthy that the latest minimum wage increase in Spain is based on a joint agreement between employers and unions. In Western Europe almost everywhere more than 9.66 euros In Western European countries with minimum wages, the lowest gross hourly wages currently permitted are higher, with the exception of Great Britain and Germany than 9.66 euros. In Belgium, where there was no agreement on an increase this year, at least € 9.66 must be paid, in Ireland since February 1, € 10.10, in the Netherlands since the beginning of the year € 10.14 and in France 10, 15 euro. Luxembourg has by far the highest minimum wage at EUR 12.38. The minimum wage in Great Britain is currently 9.35 euros, the same as in Germany, but will be increased to 9.93 euros on April 1. In addition, the euro value has been shaped by the collapse of the British pound since the Brexit referendum. If one were to convert the current British minimum wage to the average exchange rate in the 2000s, it would be 11.78 euros. Austria, the Nordic countries and Italy have no minimum wage. In these countries, however, there is usually a very high level of wage commitment, which is also strongly supported by the state. In fact, collective agreements have a general lower limit there, which, according to Schulten and Lübker, is generally above the legal minimum wages in Western Europe. “This underlines: Minimum wages set an absolutely necessary lower limit, but it is crucial for an appropriate wage development to strengthen the tariff system – also in Germany,” says Schulten. The minimum wages in the southern European EU countries range from 3.76 euros in Greece and 3.83 euros in Portugal to 5.76 euros in Spain. Slovenia is almost on a par with 5.44 euros. Minimum wages are lower in most other Central and Eastern European countries. However, they continued to catch up due to the stronger growth. In the Czech Republic, for example, you now have to pay the equivalent of 3.40 euros per hour, in Poland 3.50 euros, in Lithuania 3.72 euros, in Hungary 2.85 euros and in Romania 2.81 euros. The lowest EU minimum wage is in Bulgaria at EUR 1.87, and the level differences reflect different living costs. Based on purchasing power standards (PPS), the gap between the EU countries with a low and a relatively high lower limit is noticeably reduced. Romania, the Czech Republic or Hungary, for example, are ahead of Portugal and Greece. Whoever is paid the minimum wage in Germany benefits somewhat from the lower price level in Western Europe. However, its purchasing power still falls short of that of minimum wage earners in Luxembourg, France and the Netherlands. German minimum wages are low in relation to the median. German minimum wages are also very moderate compared to the general wage level in the Federal Republic. A look at the median wage shows this. In this country, the minimum wage in 2018, the last year for which international comparative data are available, corresponded to only 45.6 percent of the median wage according to calculations by the OECD – and this value has decreased continuously since the introduction of the minimum wage in 2015. The EU average minimum wages in 2018 were 50.7 percent of median wages. Fifteen EU countries had higher scores than Germany, including the Netherlands, Ireland, Portugal, Poland, the United Kingdom and Luxembourg, and France ranks first in the EU, where the lower limit is 61.6 percent of the median. This means that the minimum wage only in France and Portugal reaches the mark of at least 60 percent of the median wage, which, in the view of the WSI researchers Schulten and Lübker, would be a practical, pragmatic criterion for the EU’s minimum wage initiative. “In view of the large national differences in Europe,” the European minimum wage policy is ultimately “neither about establishing a uniform European minimum wage amount, nor about harmonizing the national minimum wage systems”, the experts emphasize. “The basic idea is rather to define common criteria for adequate minimum wages at the European level, which are then implemented at the national level in accordance with the wage relationships applicable there and the traditionally developed systems of wage setting.” This would be an orientation towards the 60 percent mark in bring significant improvements for low-income earners in many countries: “This is particularly true in Germany, where the frequently demanded 12 euros correspond to around 60 percent of the median wage.” Minimum wages outside the EU noticeably raised at the beginning of the year or in the course of 2019. As an example, the WSI considers the minimum wages in 15 countries with very different minimum wage levels. They range from the equivalent of 0.83 euros in Moldova, 0.97 euros nationwide in Russia and 1.07 euros in Brazil to 2.37 euros in Turkey, 6.48 euros in the USA and 7.38 euros in Japan up to converted 10.41 euros in New Zealand and 12.10 euros in Australia. In the USA in particular, where the nationwide minimum wage has not been increased since 2009, there are higher regional lower limits in addition to the national one. The highest minimum wages at the state level are in Washington State ($ 13.50, $ 12.06) and Massachusetts ($ 12.75, $ 11.39). In addition, an increasing number of cities are introducing local minimum wages that are above national and regional levels. (pdf) WSI Report No. 55, February 2020.Infographics on minimum wages in the EU plus Great Britain Contact: Prof. Dr. Thorsten Schulten Head of WSI Tariff ArchivesDr. Malte LübkerWSI tariff expertRainer JungLeiter Pressstelle


EDITOR’S NOTE: This article is a translation. Apologies should the grammar and/or sentence structure need be perfect.

MIL Translation OSI